The proposed budget, which reflects cautious optimism about the momentum being gained in the ongoing regional economic recovery, includes $218 million for operations and $27 million for capital projects – with no new programs or positions.
The proposed budget is the result of months of preparation and financial policy discussions with the City Council and builds on resiliency initiatives started in the current year, such as:
• a conservative approach to forecasting sales tax based on current year revenues;
• implementing and maintaining belt-tightening cuts to recurring expenditures; and
• ensuring that infrastructure rehabilitation is funded in the operating budget from more diverse and reliable revenue streams than previous funding from sales tax.
“Our proposed budget is very conservative and possibly the most resilient we’ve ever filed. It includes investments in public safety training initiatives, drainage and infrastructure improvements to ensure our city remains safer than ever before, and technology enhancements to make our accountability initiatives more transparent,” said Bogard. “I’m incredibly proud of the flexibility of our departments and the adjustments made to maintain our financial strength and continue providing the high quality services that are important to our residents – even during challenging swings in the economy.”
Bogard said Sugar Land continues to further assert itself as a premier regional entertainment, cultural and tourist destination – and an economic powerhouse within the Houston region. The city’s economic development efforts have benefitted residents through the growth in commercial property tax value – which makes up approximately 30 percent of the city’s tax base – and the generation of sales taxes, an important source of revenue to support city services. Commercial development is a major part of how the city is able to maintain the second lowest tax rate in Texas for cities with populations over 60,000. Additionally, a 2016 survey showed that commercial and non-residents bring in nearly 75 percent of sales tax revenue, further reducing the tax burden on residents.
With that said, sales taxes associated with the oil industry can be extremely volatile. As a result, the city has focused on efforts to improve resiliency during economic downturns – such as initiatives to reduce dependence on sales taxes to fund operating expenditures and infrastructure rehabilitation. Funding for infrastructure – such as streets, sidewalks, parks and municipal facilities – is a critical part of the operating budget, as it ensures that the city’s assets are properly maintained.
Additions to the budget include increases to the base budget – such as increases in costs of contracted services – and a 3 percent performance-based merit pool consistent with the city council-adopted compensation philosophy. A main component of the budget is compensation and benefits, with nearly half of the general fund comprised of public safety services. Overall, approximately 75 percent of general fund expenditures are directly tied to employee compensation. The city does not give cost of living increases.
Additionally, services to areas annexed by the city in December 2017 are now fully incorporated into the city’s budget. Property owners in these areas now pay city property taxes to support city services, and the positive financial impact of the annexation has provided additional funding capacity for capital projects across the city.
The proposed Capital Improvement Program totals approximately $27 million for fiscal year 2019 and $155 million in total for the next five years, with most funding allocated for drainage, municipal and street projects. Key projects include:
• a program that funds $43 million in drainage projects over the five year CIP –- this level of funding exceeds the previous investment of $35 million in drainage projects over the last five years;
• investment in fire/EMS training and equipment innovations, including a modular fire training facility, ladder truck and bunker gear replacement, and EMS training aids;
• design of an emergency operations center/dispatch center with construction anticipated in fiscal year 2020;
• mobility improvements, such as over $4 million in street reconstruction and rehabilitation and $725,000 in traffic safety improvements in FY19, to help reduce the amount of time residents spend in their cars; and
• major rehabilitation projects at various city facilities, including the replacement of roofs and other major projects that will extend the useful life of these important assets.
As part of the overall process, projects have been prioritized and synchronized with other projects to ensure they have the most meaningful impact and are completed as efficiently as possible.
The budget anticipates property taxes based on an effective tax rate plus 3 percent; however, the actual tax rate is dependent on the certified tax roll and effective tax rate calculations, anticipated in early August. There are no changes in utility rates proposed for fiscal year 2019, and a contractual increase of 2.5 percent for residential solid waste will be implemented in January 2019.
“We know having the ability to support and invest in your family is incredibly important to you, which means the cornerstone of Sugar Land’s financial management is minimizing the property tax burden on residents,” said Brown. “This is why we have worked hard to lower our property tax rate over 18 cents since 1993 and why – over the last 15 years – the average tax bill has only increased by about 3 percent annually even as the average home value has increased by about 5 percent annually over the same time period.”
Budget workshops will begin on Tuesday, July 24, with a discussion on general capital projects. A series of Thursday morning workshops will then be held to discuss the remainder of the proposed budget. The workshops are open to the public. A public hearing will be held on Aug. 21 for residents to provide feedback on the proposed budget, followed by public hearings in late August and early September on the proposed tax rate. For more information, visit www.sugarlandtx.gov/Budget.
“Ensuring Sugar Land – one of the state’s largest cities – still feels like ‘home sweet home’ is a shared responsibility of the city and the more than 117,000 residents who live here,” said Bogard. “With that, the city’s annual proposed budget is first and foremost designed to fund the priorities of Sugar Land residents, and we welcome everyone to participate in the process. Feedback is very important to ensuring Sugar Land remains the premier city in the Houston region.”